Israel's debt borrowing doubles in 2023 due to its war on Gaza

Israel's war on Palestine's Gaza has led to a doubling of the country's borrowing last year, the country's Finance Ministry said.

Israel raised $43 billion (160 billion shekels) in debt in 2023 — half of it, 81 billion shekels, since the outbreak of the war in October, the ministry said in a report on Monday.

It raised $16.9 billion (63 billion shekels) in all of 2022.

Accountant General Yali Rotenberg said that 2023 was a challenging year that required a sharp increase in financing needs and "required tactical and strategic adjustments" in the government's debt-raising plan.

"Despite the many uncertainties and challenges, the ability to raise debt in local and global markets, even in times of war, in significant volumes and very high coverage ratios, shows the high accessibility of the State of Israel to the markets and is evidence of the strength of the Israeli economy," he said.

Total debt amounted to 62.1 percent of the gross domestic product in 2023, up from 60.5 percent in 2022 due to the spike in war spending and is expected to reach 67 percent in 2024.

Israel last month raised a record $8 billion in its first international bond sale since the October 7 Hamas attacks, with very high demand even after Moody's gave Israel its first-ever sovereign credit rating downgrade in February.

The government in 2023 raised some 116 billion shekels, or 72 percent of the total, domestically, with 25 percent borrowed overseas and the rest in local non-tradable debt.

Amended 2024 state budget

Israel's public debt grew 8.7 percent last year to 1.13 trillion shekels, partly boosted by higher inflation and interest rates, the ministry said.

Interest expenses-to-GDP ratio was unchanged last year at 2.4 percent.

In its credit ratings downgrade to 'A2', Moody's cited material political and fiscal risks for the country from its war with Hamas.

Lawmakers a month ago gave their final approval to an amended 2024 state budget that added tens of billions of shekels to fund their more than six-month old war in Gaza, with extra spending on defence and compensation to households and businesses hurt by the conflict.